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Expert comment on the US threatening tariffs on EU goods

Posted by Warwick Business School at 02 July 2019, 17:25 CET |
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Expert comment on the US threatening tariffs on EU goods from Nigel Driffield, Professor of International Business at Warwick Business School. He researches international trade, and has consulted and researched for the World Bank, the European Commission, UKTI, BIS and the OECD.

Professor Driffield said: "This is essentially a reminder that in the end, in markets with specialist goods, tariffs benefit no-one, and are only for domestic political consumption.

"It sounds like the 'president is getting tough' but all that really happens is that prices paid by his domestic consumers will increase.

"It is not surprising that, with President Trump's penchant for tariffs, this long-standing dispute has again come to the surface. In this case, it is arguable that both sides have a point.

"Airbus does receive support via various EU programmes, though so has Boeing, particularly in the UK, and in particular in Boeing's supply chain in the UK. At the same time, Boeing has received considerable state support, particularly for its facility in North Carolina, and the EU has long argued that Boeing has received considerable subsidies for its airliner business in the form of very generous government contracts for defence activities.

"It is also common for the same targets to be mentioned in terms of retaliation by the US - Scotch and Irish whiskey, Italian cheese and so on. What is interesting, however, is that US importers of such products immediately complain that this will render them uncompetitive and threaten employment, while distillers of US drinks such as Bourbon immediately get nervous about the EU's response."

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